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Income Tax Rate Reconciliation Calculator (ASC 740, ASU 2023-09)

Does it tie out, and if not, where is the difference?

Statutory to effective rate in dollars and percent by ASU 2023-09 category, with the 5 percent separate-disclosure flag.

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Your figures
Example figuresIllustrative only. Type over them with your own.
Effective tax rate
24.55%
Total tax expense / pretax income
Total income tax expense
$2,455,000
Tax at statutory rate
$2,100,000
21.00% of pretax income
Drawn to one scale
Total income tax expense$2,455,000
Tax at statutory rate$2,100,000
State and local income tax, net of federal effect$420,000
Tax credits-$300,000
Changes in valuation allowances$150,000
Nontaxable or nondeductible items$60,000
All results
MeasureResult
Effective tax rate24.55%
Total income tax expense$2,455,000
Tax at statutory rate
21.00% of pretax income
$2,100,000
State and local income tax, net of federal effect
4.20% of pretax income
$420,000
Tax credits
-3.00% of pretax income
-$300,000
Changes in valuation allowances
1.50% of pretax income
$150,000
Nontaxable or nondeductible items
0.60% of pretax income
$60,000
Changes in unrecognized tax benefits
0.25% of pretax income
$25,000
5% threshold (5% of pretax income x statutory rate)$105,000
Items to disaggregate (at or above the threshold)
Tested: foreign tax effects, cross-border tax laws, tax credits, nontaxable or nondeductible items, other
Tax credits
How this was worked out
Work shownrecomputed as you type
Tax at statutory rate = pretax income x statutory rate
Total tax = statutory tax + reconciling items
Threshold = 5% x |pretax income x statutory rate|

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Tax at statutory rate = pretax income x statutory rate
  • Total tax = statutory tax + reconciling items
  • Threshold = 5% x |pretax income x statutory rate|

How it works

ASU 2023-09 requires public business entities to disclose a tabular rate reconciliation in both percentages and dollars, using eight specific categories: state and local income tax net of federal effect, foreign tax effects, changes in tax laws or rates, cross-border tax laws, tax credits, changes in valuation allowances, nontaxable or nondeductible items, and changes in unrecognized tax benefits.

The eight categories are disclosed whatever their size. Under ASC 740-10-50-12A(b), a reconciling item equal to or greater than 5 percent of pretax income times the statutory rate is disclosed separately when it falls within cross-border tax laws, tax credits or nontaxable or nondeductible items (by nature), within foreign tax effects (by jurisdiction and by nature), or outside the eight categories (by nature). Entities other than public business entities disclose the nature and effect of significant reconciling items qualitatively.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

Which statutory rate?

The domestic federal statutory rate of the entity's country of domicile. For a US entity that is 21 percent.

How is the 5% test applied?

Each reconciling item in the foreign tax effects, cross-border tax laws, tax credits and nontaxable or nondeductible categories, and each item outside the eight categories, is compared with 5 percent of pretax income from continuing operations times the statutory rate. Items at or above it are shown separately.

Does this apply to private companies?

Private companies disclose the nature and effect of significant reconciling items, without the tabular reconciliation.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

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